Get a full breakdown of the various requirements, how burial insurance policies work, and what to know when buying online.
For most people, burial insurance plans only have a few requirements:
- A social security number (SSN) or a taxpayer identification number (TIN). It’s critical to remember that the overwhelming majority of final expense insurance companies require an SSN. There are only a few companies that will accept an applicant who only has a TIN.
- You are physically within the United States when you apply for a policy. Life insurance laws in every state require applicants to be actually located in the country when they formally apply. You can relocate or visit other countries after the policy is issued, and your policy will remain intact and pay out like normal if you die outside of the USA.
- You have the mental capacity to enter into a legal contract. When you apply for any type of life insurance, you’re signing a legal document. You agree to pay premiums, and the insurance company promises to pay the death benefit once you die. A person who has a mental incapacity from dementia or mental retardation cannot lawfully sign a legal document, therefore, rendering them unable to apply. Finally, insurance companies will not allow a POA to sign in their place. They all require the insured to sign/consent in some way which would be impossible due to their mental incapacity.
If you meet those three requirements above, there’s a high chance that you can secure a new policy.
However, if you’re above 85, your health will be the fourth requirement. From ages 18-85, guaranteed acceptance burial insurance policies are available. With those, your health issues are not a factor because acceptance is guaranteed. However, at 86 and above, there are no guaranteed issue options, so you must answer health questions and subsequently be approved.
Burial insurance is a type of whole life insurance that has small coverage amounts and limited to no underwriting. Burial insurance is often also called final expense insurance or funeral insurance. The premiums never increase, the coverage doesn’t decrease, they build cash value, and the policy lasts forever.
These plans are typically meant to pay for funeral costs when you die, but the money can technically be spent on anything, such as medical bills or remaining debts. Upon your death, the insurance company will pay your loved ones the death benefit in the form of a check (tax-free) so they can carry out your funeral. Any leftover money is theirs to keep.
Most companies offer these plans to seniors 50-90 with up to $50,000 in coverage (there are options below age 50).
A medical exam is never required. Some plans are simplified issue, which means there are health questions you must answer. Alternatively, there are plans called guaranteed acceptance which have no health questions. We’ll discuss the differences between these two options below.
A simplified issue policy does not require a medical exam, but you must complete a health questionnaire. In addition, the insurance company will review your medication history because that reveals much about your overall health. If you’re approved, there is no waiting period. That means you’re fully insured 100% for natural or accidental death the day you make your first payment.
A guaranteed issue life insurance policy requires no medical exam or answering of health questions. Regardless of your pre-existing conditions, you’re approval is assured. Keep in mind that all plans without health questions have a two-year waiting period. If you die during the waiting period, the insurer will merely refund the premiums you’ve paid plus interest (usually 10%). After the waiting period, the full death benefit becomes payable for any reason. Finally, guaranteed issue plans are generally the most expensive type of final expense insurance you can buy. That’s because the insurance provider takes on heavy risk not knowing about the applicant’s health. With any form of insurance, a higher risk always translates into a higher price.
Many companies allow you to buy burial insurance online. Some famous examples include the AARP life insurance program, the Colonial Penn $9.95 plan, Globe Life insurance, AAA, USAA, TruStage life insurance, and many others.
They all have electronic applications you can complete and submit directly on their websites.
From a requirements perspective, those online applications are only meant to be submitted by the insured. Someone other than the insured is not allowed to do it on their behalf.
That means if you’re a child buying life insurance for a parent or a POA over someone else, you’re not supposed to use those online applications (unless the insured is with you and they electronically sign their name).
The requirements to get burial insurance are minimal. As long as you’re in the United States when you apply, have an SSN or TIN, and can legally sign a contract, you can get a burial policy. However, above 85, you must be in reasonably decent health. Below the age of 86, there are plans with guaranteed approval, but those don’t exist above 85.
The requirements for a burial insurance policy never include having to take a medical exam. Some plans have health questions, and some are guaranteed acceptance which have no health questions and guaranteed approval.
The proceeds from a burial policy are paid to whomever you want. For example, your beneficiaries can be loved ones, friends, charities, or a funeral home. Also, you can have multiple primary and backup (contingent) beneficiaries, and you can change your beneficiaries as many times as you want at any time you want.
Burial insurance covers the life of the insured for the specified death benefit. When you die, the policy will pay out a lump sum of cash to your beneficiaries which can be used to pay for your casket, memorial services, flowers, vault, and anything related to a funeral. Your family can also use the money to pay for credit card debt, medical bills, or anything else.
Most final expense burial policies are whole life insurance plans which never expire. However, some companies sell term burial policies that expire at age 80 or 90.